Correlation Between Check Point and MKS Instruments

Can any of the company-specific risk be diversified away by investing in both Check Point and MKS Instruments at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Check Point and MKS Instruments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Check Point Software and MKS Instruments, you can compare the effects of market volatilities on Check Point and MKS Instruments and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Check Point with a short position of MKS Instruments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and MKS Instruments.

Diversification Opportunities for Check Point and MKS Instruments

-0.52

Correlation Coefficient

Check Point  MKS Instruments

Excellent diversification

The 3 months correlation between Check and MKS is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and MKS Instruments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MKS Instruments and Check Point is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Check Point Software are associated (or correlated) with MKS Instruments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MKS Instruments has no effect on the direction of Check Point i.e., Check Point and MKS Instruments go up and down completely randomly.

Pair Corralation between Check Point and MKS Instruments

Assuming the 90 days trading horizon Check Point Software is expected to generate 0.57 times more return on investment than MKS Instruments. However, Check Point Software is 1.75 times less risky than MKS Instruments. It trades about 0.17 of its potential returns per unit of risk. MKS Instruments is currently generating about -0.09 per unit of risk. If you would invest  17,885  in Check Point Software on December 28, 2024 and sell it today you would earn a total of  3,265  from holding Check Point Software or generate 18.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Check Point Software  vs.  MKS Instruments

Check Point Software

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Check Point Software are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Check Point displayed solid returns over the last few months and may actually be approaching a breakup point.

MKS Instruments

Risk-Adjusted Performance

Very Weak

Over the last 90 days MKS Instruments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Check Point and MKS Instruments

The main advantage of trading using opposite Check Point and MKS Instruments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, MKS Instruments can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in MKS Instruments will offset losses from the drop in MKS Instruments' long position.

The idea behind Check Point Software and MKS Instruments pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.